Shouldn't this be the day we crash:
biz.yahoo.com
Clinton proposes USA retirement accounts
WASHINGTON, April 14 (Reuters) - The Clinton administration outlined a proposal on Wednesday to help fund individual
retirement savings accounts for Americans by using some of the projected federal budget surpluses.
Under the plan, which President Bill Clinton was to announce later in the day, the government would match voluntary contributions
and provide an automatic government contribution, which would be a refundable tax credit of $300.
The tax credit would be supplemented by individual contributions. For individuals making $40,000 a year or less the government
would match voluntary contributions dollar for dollar up to a total of $1,000 including the tax credit.
Officials said it would be possible for a couple in this income group to save $2,000 a year under this scenario, only contributing $700 of their own money. A savings
of $2,000 year over 40 years could build to a retirement account of $253,000, assuming a conservative real rate of return of 5 percent.
Investors could choose from a limited number of broad-based investment options: bond funds, stock funds and mixed funds.
The automatic $300 tax credit phases out between the income levels of $40,000 and $80,000 for joint filers.
The dollar for dollar match for joint filers below $40,000 would phase down to 50 cents per dollar up to families making up to $80,000, and remains at 50 cents
per dollar up to $100,000 for joint filers.
In his State of the Union address on Jan. 19, the president proposed setting aside 62 percent of budget surpluses expected over the next 15 years, or some $2.7
billion, to shore up the Social Security retirement income system.
He also proposed using a further 11 percent of the forecast surpluses to create the so-called Universal Savings Accounts as a way of encouraging individuals to
save for their retirement.
The White House and the Republican-controlled Congress have been pondering how to shore up Social Security's finances before it goes bankrupt as the massive
''baby boom'' generation retires in the next century.
Last month the government released new forecasts suggesting that Social Security will go broke in 2034, two years later than originally expected. |
